This SBIR Phase II Grant Application has as its goal the discovery, development and commercialization of new, small molecule drugs which have their origin as natural products elaborated by marine microorganisms. Initial disease targets for drug development include: i) new antibiotics which are broadly effective against microbial pathogens and are effective in controlling pathogens resistant to currently utilized antibiotic drugs, and ii) new drugs able to modulate inflammatory process and suppress subsequent allergic responses. Marine microorganisms represent a vast, unexplored, and promising source material for the discovery of novel drugs. Work completed under Phase I of this Application was successful in establishing routine methods and manipulations to circumvent difficulties traditionally associated with drug discovery efforts employing marine microorganisms. These inherent difficulties include the isolation and growth of marine microorganisms, the stimulation of bioactive material production, and the removal or suppression of interfering media components during bioassay. Phase I work also resulted in the discovery of more than 20 highly active materials. Work proposed under Phase II represents the application and expansion of these routine methods and manipulations to a substantial bioactive materials discovery and development effort. The screening program will employ: i) a collection of taxonomically heterogeneous marine microbial isolates collected from widely diverse geographic regions and ecological niches, and ii) a battery of antibiotic assays, and targeted receptor binding based pharmacological assays. The active materials discovered in the screening component are advanced through assay guided fractination for compound isolation and prufication followed by a chemistry intensive effort focused on determining the structure of the active chemical moity. The most active drug materials will be advanced to pre-clinical development. PROPOSED COMMERCIAL APPLICATION Successful development and application of the proposed technology should revitalize the flow of novel, small molecule, natural product drug candidates into preclinical safety and efficacy testing programs. This Phase II Grant program is specially focused on developing new drugs to treat important disease categories comprising; I infectious diseases including those infections resulting from antibiotic resistant pathogens and ii) new treatment for inflammation and allergy.